cherries002 Posted November 12, 2015 Share Posted November 12, 2015 (edited) I've tried locating appropriate answers but figured I would ask away as I cannot find the answer. We are keeping our mortgage free home in the UK and the mother in law will stay in rent free. We move in 3 weeks to Coffs Harbour on a 489 visa. The house is potentially to keep her housed and we would sell in the future. Do we have to pay extra tax on this ? We are looking to rent initially on arrival to Oz until we find somewhere we like and then look to take out a further mortgage as and when. Any help ŵould be very much appreciated. Edited November 12, 2015 by cherries002 Correct spelling Quote Link to comment Share on other sites More sharing options...
Suzukiscottie Posted November 12, 2015 Share Posted November 12, 2015 489 visa is a temporary visa if I recall correctly. Temporary residents don't need to declare foreign income. Even if you were in Australia as a permanent resident, if the house is not generating any income for you then there is nothing to declare. Quote Link to comment Share on other sites More sharing options...
rammygirl Posted November 12, 2015 Share Posted November 12, 2015 You might though want to check on current rules for capital gains tax liability both in UK and Australia. Quote Link to comment Share on other sites More sharing options...
Petkula73 Posted November 13, 2015 Share Posted November 13, 2015 (edited) A 489 does not give you the right to settle permanently in Australia, ergo you're a temporary resident and as such you do not need to declare your overseas earnings. As such you only need to declare rent to HMRC in the UK and you'll not be liable for Capital Gains tax here when you come to sell. If you switch to a PR visa later, you then become liable for your overseas income and will be expected to declare the full amount you receive in rent to the ATO. Likewise, if you sell up in the UK and you've been here for more than six years on a PR (and the property in the UK is classed as your primary property - i.e. you don't own and live in a house here) you'll need to declare the CGT on the increase of the house value from the time you were granted PR. My advice for all of the above is use a tax agent. Australian bureaucracy is legendary and you won't believe how complicate they can make something quite straightforward. A good tax agent will know exactly what you can deduct from your annual submission and can save you thousands and thousands. Lots of good ones out there, but I'll give a shout out to GM Tax who do mine (and lots of other people on here). Edited November 13, 2015 by Petkula73 Quote Link to comment Share on other sites More sharing options...
BackToLife Posted November 13, 2015 Share Posted November 13, 2015 We move in 3 weeks to Coffs Harbour on a 489 visa..... Hi Cherries, will you be working at the CH Base Hospital? Just be prepared for wild and woolly weather. Coffs can get very, very humid, very very hot, and very, very windy, particularly in the afternoons. And then there are the very heavy thunderstorms which often come out of the blue. However Coffs is sub-tropical, which goes hand in hand with weird weather. You are coming to a very beautiful part of Australia, so have made a wise choice and hopefully will garner some wonderful memories to take back to the UK (if/when that happens). Quote Link to comment Share on other sites More sharing options...
scuffythetugboat Posted November 13, 2015 Share Posted November 13, 2015 (edited) As there is no rent being paid there is no income to declare to anyone anywhere. If you decide to sell the house in the future then UK capital gains tax would come into the equation if you sell it for more than you paid for it after the allowances are taken into consideration. Edited November 13, 2015 by scuffythetugboat Quote Link to comment Share on other sites More sharing options...
Petkula73 Posted November 13, 2015 Share Posted November 13, 2015 As there is no rent being paid there is no income to declare to anyone anywhere. If you decide to sell the house in the future then UK capital gains tax would come into the equation if you sell it for more than you paid for it after the allowances are taken into consideration. Capital Gains Tax in the UK is pretty complicated. If you reside overseas and sell a house that you've bought as an investment you're liable for full CGT in the UK. If you have previously lived there, and subsequently let it out you're also liable for CGT, minus Private Residence Relief (i.e. relief because you lived there) and Private Letting Relief (you lived there, but subsequently rented it out - i.e. not a buy to let). Whichever of these reliefs is lowest will be applied to both (i.e. they'll be for the same amount). So whatever is lowest from either: 1. The gain you've made since 2015 * (18/the number of months you've not lived there) - e.g. 100,000*(18/50) = 36,000 of relief 2. Or 40,000 if calculation 1 is higher than 40K So a 100,000 gain after 50 months would provide you with a net 28,000 capital gain which would be taxable at 18% once your personal allowance(s) of 11,000 have been deducted. In this example, if two people owned it, the net CGT would be 28000/2 = 14000 gain per person. Minus 11,000 personal allowance = 3000 taxable amount. 3000 * 0.18 = 540 of tax due per person. The longer you keep the property, the lower your allowance will be and the higher your tax liability (provided the gain goes up or remains the same). Selling in 2025 with a 100,000 gain would leave you with a 24,000 taxable amount and a 4300 tax bill per person. However, if you're a temporary resident here I'm pretty sure you're exempt from all of this as the house in the UK would still be classed as your primary residence. In this case you'd have the same rules as a normal British taxpayer applied to you - i.e. no CGT on privately owned homes that are not buy to lets. And to add a bit more complication, if you become a permanent resident and sell after six years you'll be liable for Australian CGT on your overseas primary residence property, meaning you would need to let HMRC take their cut first, then declare the overseas tax you'd paid on your ATO return to avoid being taxed twice. Complicated. And I'll be honest here that I am probably incorrect on loads of this, so as per my comment above, always use a properly qualified accountant to do your tax returns - life's too short to do them yourself for the sake of a few hundred dollars... Quote Link to comment Share on other sites More sharing options...
cherries002 Posted November 13, 2015 Author Share Posted November 13, 2015 Hi Cherries, will you be working at the CH Base Hospital? Just be prepared for wild and woolly weather. Coffs can get very, very humid, very very hot, and very, very windy, particularly in the afternoons. And then there are the very heavy thunderstorms which often come out of the blue. However Coffs is sub-tropical, which goes hand in hand with weird weather. You are coming to a very beautiful part of Australia, so have made a wise choice and hopefully will garner some wonderful memories to take back to the UK (if/when that happens). Hi.. Hopefully I will gain employment there, I've a few jobs to apply for now. I am well aware of the wacky weather but can't wait to experience it. x Quote Link to comment Share on other sites More sharing options...
Alan Collett Posted November 17, 2015 Share Posted November 17, 2015 The tax position in the UK is somewhat different to that described by Petkula above - some of the comments are correct, but not all. To save me re-typing, have a look at this blog post: http://www.gmtax.com.au/new-uk-capital-gains-tax-cgt-regime-affecting-residential-property-about-to-start/ Best regards. Quote Link to comment Share on other sites More sharing options...
Petkula73 Posted November 18, 2015 Share Posted November 18, 2015 The tax position in the UK is somewhat different to that described by Petkula above - some of the comments are correct, but not all. To save me re-typing, have a look at this blog post: http://www.gmtax.com.au/new-uk-capital-gains-tax-cgt-regime-affecting-residential-property-about-to-start/ Best regards. Fair enough, I'm no expert. Quote Link to comment Share on other sites More sharing options...
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